The focus this week will be on US data, notably the personal income, consumption, and PCE price index data for Apr. There will also be several speeches and testimony by US Fed Vice Chair Quarles and the rates decision by the RBNZ.
The key US data highlights this week are:
Personal income, consumption, and the PCE price index data for Apr. The consumer inflation number will be important – this is the release followed by the FOMC. There was a relatively large acceleration in the annual inflation rate for Mar, which increased to 2.3% from 1.5% in Feb. The Apr 21 result will cycle over the lowest point of the price index for 2020, so base effects should be more notable. This will be the last month of a lower base contributing to the headline inflation number. Annual core inflation is expected to increase from 1.8% in Mar to 3% in Apr.
US durable goods orders will be released for Apr – expecting a +0.7% increase in orders (slower than the 1% increase in Mar).
US new home sales for Apr are expected to increase at a slightly slower pace of 975k (down from 1.021m SAAR basis in Mar) – as material delays continue to impact construction and higher mortgage rates impacted demand somewhat.
There will also be several regional US manufacturing surveys released this week for May. Expecting similar themes of production impacts from supply chain disruptions, higher prices, and rising order backlogs. From the Markit prelim US PMI report last week:
Nonetheless, a further marked deterioration in vendor performance limited operating capacity and reportedly held back output growth. https://www.markiteconomics.com/Public/Home/PressRelease/392edb090fd34a7cb68bf22a1ddb7789
In Australia, the Q1 construction work and private sector CAPEX reports will be released this week, ahead of Q1 GDP next week. Aus employment data for Apr disappointed last week with an overall decline in total employment for the month. The unemployment rate still declined due to a fall in participation.
This week, the US Treasury will settle $305bn in ST Bills, 10yr TIPS, and 2yr FRN’s, with a net paydown of -$5bn. The net new cash raised for the quarter to date is approx. $29bn. The US Treasury will also auction the 2yr, 5yr, and 7yr Notes this week which will settle next week on 1 Jun.
This week, approx. $15bn in ST Bills will mature on the Fed balance sheet and will be rolled over. Next Mon 31 May will be the US Memorial Day Holiday.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
